Assessing government spending efficiency and explaining inefficiency scores: DEA-bootstrap analysis in the case of Saudi Arabia

Abstract

The recent Saudi Arabia's "Vision 2030" including the National Transformation Plan has renewed the debate on the efficiency of government spending. The aim of this paper was twofold. First, to measure the relative efficiency of Saudi Arabia's public spending over the period 1988-2013 using non-parametric approach. Second, to explain the inefficiency scores using a DEA-Bootstrap analysis by incorporating environmental variables. The empirical results show that, on average, the public spending is inefficient, implying that Saudi Arabia can improve their performance on health, education and infrastructure without increasing spending. The empirical explanation of the inefficiency scores using a DEA-Bootstrap analysis shows that the unemployment and broad money negatively impact government expenditure mainly in the case of infrastructure and health. Our findings can be useful for policymakers in order to set out a structural adjustment plan to improve the efficiency level for education, health and infrastructure expenditures.

Evaluation of Efficiency in Selected Areas of Public Services in European Union Countries

“…Dutu and Sicari [25] assessed the efficiency of welfare spending (health care, secondary education, and general public services) and provided possible quantified improvements for both output and input efficiency in OECD countries. The empirical results of Ouetani et al [34] showed that, on average, public spending was inefficient and that Saudi Arabia could improve its performance in health, education, and infrastructure without having to increase spending. Similarly to our research, Merickova et al [32] noted that "the total amount of public expenditure does not have significant impact on the socio-economic development; however public expenditures in 'productive' sectors of public services (especially education, health and social services) have the potential of positive impact on the socio-economic development" in EU countries.…”

“…They have looked for ways of rendering public resources more efficient and have accordingly proposed measures for improvement, e.g., Afonso et al [27], Curristine et al [28], Merickova and Stejskal [29], and Schaltegger and Torgler [30]. Other authors have summarized factors impacting the public sector and its efficiency [25,[31][32][33][34]. The evaluation of public sector and public service efficiency has also been elaborated on the macroeconomic level.…”

“…The authors also tested the association between public sector performance and public expenditure efficiency and other key socioeconomic indicators. Ouertani et al [34] assessed government spending efficiency and explained inefficiency scores using DEA-bootstrap analysis in the case of Saudi Arabia. The empirical results showed that, on average, public spending was inefficient and implied that Saudi Arabia could improve their performance on health, education, and infrastructure without having to increase spending.…”

Inefficiency Factors in Basic Health Care Supply in Côte d’Ivoire: A Comparative Econometric Analysis

“…This study identifies seven (7) explanatory variables: (i) geographic accessibility (Acc_Geo): the average distance, between 3 miles and 9 miles, separating the population from the nearest PHCF; (ii) the number of PHCFs per region (Nb_ESPC); these two variables reflect the geographic influence on the level of performance of the PHCFs (Té hi, It can influence the level of efficiency of the institution through an increase in the activity rate per staff member but especially through an improvement in the conditions for receiving patients; (vi) the rate of extreme poverty per region (Taux_Extrempauvr), which reflects the situation of the national economy in terms of living standards and regional disparities (inequalities in development). This variable, relative to various studies, reveals that a high level of poverty is a source of inefficiency in the health system in the sense that a significant and positive correlation is established between the increase in gross national income per capita or GDP per capita and the efficiency of the health system (Combier et al, 2013;Afonso & St. Aubyn, 2011); (vii) the adult literacy rate by region (Taux_Alphabet); according to various studies (Ouertani et al, 2018;Alvarez and Hernandez, 2009), it is significantly and positively correlated with the efficiency of maternal health care provision in sub-Saharan Africa…”

“…Thus, these debates are part of the general question concerning the control and optimality of public health expenditure with a view to improving the well-being of populations (WHO, 2018;Ouertani et al, 2018;Katharakis et al, 2014;Sen, 1983;and Becker, 1962). But even more so, knowledge and prioritization of the levers through which the use of these resources could be improved remain fundamental and constitute a major challenge, especially in Sub-Saharan African countries (Ouertani et al, 2018;Lawanson & Novignon, 2017; However, an overview of studies on this issue reveals that the vast majority of them have focused more on the determinants of inefficiency than on the method of estimating efficiency per se (Lawanson & Novignon, 2017;Dukhan, 2010;Ouellette & Petit, 2010). Yet, there are two problems with such an approach.…”